Answer:
The necessary tax reduction amounts to $13.33
Explanation:
The Tax Multiplier indicates the extent of change (decrease) in income resulting from a tax alteration (increase).
The formula for Tax Multiplier is Tax Multiplier = ΔY / ΔT = - MPC / (1- MPC)
Given: Required Change in Income [ΔY] = 40
The MPC is 0.75
Inserting into the formula;
40 / ΔT = - 0.75 / (1- 0.75)
40 / ΔT = - 0.75 / 0.25
40 / ΔT = - 3
Thus, ΔT = - 40/ 3
This leads to ΔT = - 13.33
Answer:
Accounts receivable as of July 31 = $261,800
Explanation:
The information for June is not needed since it's stated that 60% is collected in the sale month and 40% is collected in the following month. Therefore, by July 31, all sales from June will have been collected and are not outstanding.
July credit sales = 85% * $770,000 = $654,500
Amount collected in July (60%) = 60% * $654,500 = $392,700
Receivables as of July 31 = $654,500 - $392,700 = $261,800
The Merchandise Inventory account includes costs related to purchased goods, shipping and handling fees, transit insurance, and storage expenses.
Explanation:
Merchandise inventory consists of finished goods available for resale to consumers.
It encompasses all items that a company owns and intends to sell.
A merchandise enterprise:
- Generates net income by purchasing and selling merchandise
- Can acquire products from manufacturers to sell to retailers
- May also buy from manufacturers and sell directly to end-users
- Can operate as either a wholesaler or a retailer
Classified as a current asset, the Merchandise Inventory is vital for tracking.
The Merchandise Inventory account includes costs associated with purchases, shipping fees, preparation costs and handling expenses.
